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TMI Blog2023 (10) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the question of paying Service Tax at the time of receipt of these advances does not arise since they are only to be taken as loans and it became part of the consideration as and when the invoices were raised. The question here was whether the unadjusted amount received as mobilization advance during the Service Tax regime was liable to GST after the introduction of GST - In the present case, the liability of tax on mobilization advance is not in dispute, the only dispute is the time of payment of tax. Even as per The Point of Taxation Rules , the liability to pay taxes in the projects undertaken by the appellant arises as per clause b (i) in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service. In the instant case, the appellant has paid the tax on completion of the service on the invoice value which includes the mobilisation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CCE: 2017 (47) STR 17 (Tri.-Mum.) (iii) CCE vs. Thermax Engineering Construction Co. Ltd.: 2019 (22) GSTL 80 (Tri.-Mum.) (iv) Hindustan Shipyard Ltd. vs. CCE: 2019 (21) GSTL 394 (Tri.-Hyd.) (v) SMS Infrastructure Ltd. vs. CCE: 2017 (47) STR 17 (Tri.-Mum.) (vi) GB Engineering Enterprises Pvt. Ltd. vs. CCE: 2017 (52) STR 313 (Tri.-Chen.) (vii) Paharpur Cooling Towers Ltd. vs. CCE: 2015 (37) STR 550 (Tri.-Del.) 2.1. It is further submitted that in the context of Sales Tax Laws, it has been held that the receipt of mobilisation advance is not liable for payment of sales tax or not liable to TDS as per the decisions given below: (i) Hindustan Construction Company Ltd. vs. State of Haryana: [1998] 109 STC 660 (P H) (ii) Delhi Electric Supply Undertaking vs. CST: [2006] 146 STC 72 (All.) (iii) Smt. B. Narasamma v. Dy. CCT [2016] 146 STC 72 (All.) 3. The Authorised Representative on behalf of the Revenue submits that the advance of mobilisation advances received by them is nothing but an advance, therefore, they were liable to pay Service Tax as and when it was received. Since the Service Tax was paid at a later date, they were liable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket. (b) [ * * * * ] (c) gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise. SECTION 68: Payment of service tax. (1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section [ 66B] in such ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided is issued: Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules,1994, the point of taxation shall be the date of completion of provision of the service. (b) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment. Provided that for the purposes of clauses (a) and (b),- (i) in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service; (ii) wherever the provider of taxable service receives a payment up to rupees one thousand in excess of the amount indicated in the invoice, the point of taxation to the extent of such excess amount, at the option of the provider of taxable service, shall be determined in accordance with the provisions of clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received as Advance in that case also no service tax could have been demanded at the time of receipt as the same was not taxable. In case of M/s. Thermax Instrumentation Ltd. v. CCE, 2015-TlOL-2736-CESTAT-MUM 2016 (42) S.T.R. 19 (Tri.-Mumbai) the Tribunal held that advance cannot be considered as receipt towards taxable service as it is an obligation on the part of the customer of the mutual commitment between the two parties to honour the contract. Similarly in case of CCE, Ludhiana v. J.R. Industries, 2009 (16) S.T.R. 51 (Tri.-Del.) it was held that when service was not provided the advance receipt cannot be taxed. We thus hold that there is no service tax liability on advance received by the assessee and set aside the demands and penalties confirmed against M/s. Thermax . 4.4 In the case of Gammon India Ltd vs. Commissioner of Service Tax, Mumbai: 2021 (44) GSTL 373 (Mumbai), the Tribunal held that : 9. The several contracts provide for the payment to be made at different, pre-determined stages of performance and are, generally, subject to evaluation of the work undertaken. It is also seen that such appraisal, as a prelude to making payments, is not undertaken until aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of goods and services. 11. The appellants relied upon the decisions of the Tribunal in the case of Thermax Instrumentation Ltd. v. Commissioner of C. Ex., Pune-I [2016 (42) S.T.R. 19 (Tri. - Mumbai)] and GB Engineering Enterprises Pvt. Ltd. v. C.C.E., Tiruchirapalli [2017 (52) S.T.R. 313 (Tri. - Chennai)], wherein the CESTAT had observed that the mobilization advance is like earnest money and argued that this nature has not changed after implementation of GST and hence it will be covered under the express proviso to Section 2(31) of the GST Act which excludes deposits from the definition of Consideration unless it is adjusted against supplies. It is observed that the advance was received in the year 2011 and a considerable part of the advance remained unadjusted as on 30- 6-2017. The present case originated due to introduction of GST with effect from 1-7-2017. However, the observations of the Tribunals in the cases relied upon by the appellant were clearly within the ambit of the legal provisions of Service Tax which was prevalent, when the decisions were proclaimed. In the present case, the question relates to whether the unadjusted part of the advance received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the liability of tax on mobilization advance is not in dispute, the only dispute is the time of payment of tax. Even as per The Point of Taxation Rules , the liability to pay taxes in the projects undertaken by the appellant arises as per clause b (i) in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service; 7. In the instant case, the appellant has paid the tax on completion of the service on the invoice value which includes the mobilisation advances received by him. It is not the case of the department that invoices were raised in piecemeal without payment of tax as and when the advances were received. Therefore, based on the above decisions and the observations made therein I find no merit in demanding interest assuming that the date of payment of tax arose based on the advances received. 8. The impugned order is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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